Is a tax extension needed for California schools?

January 11, 2016

Gov. Jerry Brown campaigned up and down the state in 2012 to pass a temporary measure known as Proposition 30, which raised the sales tax for four years and income taxes on high earners for seven years. It generated $8 billion a year to educate California’s 6.2 million elementary and secondary school students. This is the final year the state will enjoy full revenues under Proposition 30 before the temporary tax begins to taper off.

Voters are likely to hear a lot about the education budget this year because labor and health organizations hope to place an initiative on the November ballot that would extend Proposition 30’s tax on high earners at least through 2030. Taxes are always a difficult issue for voters. This time, the economy and school budgets have been doing well, but there are concerns looking ahead.

As Brown said in his budget proposal earlier this month, the state’s $71.6 billion school budget has increased more than 50 percent since 2011. The overall growth per student has gone up by more than $3,800, from $10,699 in 2011 to a projected $14,550 this year.

School spending is also projected to go up whether or not the Proposition 30 taxes are extended. The Legislative Analyst’s Office, the state’s nonpartisan budget analyst, projects the minimum funding guarantee for public schools and community colleges is projected grow to $77.5 billion in 2019.

In addition, if the economy continues to do well, it will trigger the so-called “maintenance factor” in the voter-approved school funding formula, generating another $6.3 billion state obligation for schools. The maintenance factor, which provides an added benefit for school budgets when revenues surge, is intended to be paid over future years.

If voters approve the tax extension, the budget analyst estimates it could raise between $5 billion and $11 billion a year depending on the health of the economy. Because schools get roughly 50 cents for each dollar of new revenue, the education guarantee would grow between $2.5 billion and $5.5 billion, meaning state school funding would be between $80 billion and $83 billion in 2019. In this case, school funding would keep up with the economy so that no maintenance factor is triggered.